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RBS, Commerzbank Drawn Into U.S. Iran Money Probe

U.S. authorities are investigating Royal Bank of Scotland and Commerzbank over possible breaches of sanctions on Iran, in a widening crackdown which has already cost Standard Chartered a hefty fine.

U.S. authorities are investigating Royal Bank of Scotland and Commerzbank over possible breaches of sanctions on Iran, in a widening crackdown which has already cost Standard Chartered a hefty fine.

An RBS spokeswoman declined detailed comment on Wednesday but referred to disclosures published with the bank's half-year results earlier this month. These said RBS had initiated talks with U.S. and British authorities on whether it complied with economic sanctions on Iran, and that it could face a "material impact" from the investigation.

The inquiry raises the possibility of a substantial punishment for the part-nationalized British bank, which is also being investigated for its involvement in the Libor rate rigging scandal, ramping up pressure on Chief Executive Stephen Hester.

The United States first imposed sanctions on Iran more than 30 years ago but has tightened them in recent years as it tries to stifle Tehran's nuclear program.

In the disclosures accompanying the RBS results on Aug. 3, the British bank said it had "initiated discussions with UK and U.S. authorities to discuss its historical compliance with applicable laws and regulations, including U.S. economic sanctions regulations".

These followed an internal review begun by Hester shortly after his arrival at the bank in 2008.

"The investigation costs, remediation required or liability incurred could have a material adverse effect on the group's net assets, operating results or cash flows in a particular period," the bank said. RBS had been making similar disclosures for the past 18 months, the spokeswoman said.

The scale of the transactions being investigated at RBS, which is 82 percent-owned by the taxpayer, was not clear.

The Financial Times reported on Wednesday that the U.S. Federal Reserve and Department of Justice were conducting the investigation, citing several people close to the situation. It cited a person familiar with the situation as saying one risk manager had already left the bank following the internal review.

A spokesman for the Federal Reserve said it could not "comment on supervisory matters pertaining to individual institutions". A representative at the Justice Department did not respond to a request for comment.

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